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Benchmarking private fund performance has traditionally required pulling data from multiple sources, organizing funds by strategy and vintage, and manually comparing metrics across peer groups.
But when evaluating a fund, the initial question is usually much simpler: How is this fund performing relative to its peers?
With the right data, you can answer that question in under 60 seconds.
Start With the Right Peer Group
A private fund's performance means very little in isolation.
A 12% net IRR might look attractive on its own, but whether it represents strong performance depends on what you're comparing it against. A 2018 buyout fund should not be benchmarked against a 2022 venture capital fund or a private credit strategy launched in a completely different market environment.
That is why the first step in benchmarking performance is defining a relevant peer group.
At a minimum, compare funds based on:
- Asset class and strategy
- Vintage year
- Geography, when relevant
- Fund size or market segment, when appropriate
Once you have the right peer set, the performance metrics become much more meaningful.
Look Beyond IRR
IRR is often the first number investors look at, but it should not be the last.
A more complete private markets benchmark incorporates three core metrics: Net IRR, TVPI, and DPI.
Net IRR measures the annualized return generated for investors after fees and expenses. It provides a useful way to compare the pace and magnitude of returns across similar funds.
TVPI, or Total Value to Paid-In Capital, measures the total value created relative to the capital contributed by investors. It includes both realized distributions and the remaining value of the portfolio.
DPI, or Distributions to Paid-In Capital, measures how much capital has actually been returned to investors.
Looking at all three helps distinguish between funds generating realized cash returns and those whose performance is still largely dependent on unrealized portfolio values.
Put the Fund in Context
Once you've selected the appropriate strategy and vintage, the next step is to see where the fund sits within its peer group.
Rather than asking whether a fund has a "good" IRR or TVPI, ask:
Is it outperforming or underperforming comparable funds?
For example, if you're evaluating a 2019 private equity fund, you can compare its Net IRR, TVPI, and DPI against other 2019 private equity funds. From there, you can quickly determine whether the fund is performing above or below the peer median and identify where its performance stands relative to the broader universe.
That context is especially important in private markets, where performance can vary significantly by vintage.
Pay Attention to Fund Maturity
Vintage year also helps explain the relationship between IRR, TVPI, and DPI.
For newer funds, DPI may naturally be low because investments have not had enough time to mature and generate exits. In those cases, TVPI and Net IRR can provide additional insight into early portfolio performance, although both may still be heavily influenced by unrealized valuations.
For older vintages, DPI becomes increasingly important.
A mature fund with a strong TVPI but relatively low DPI may still have a significant portion of its reported value tied up in unrealized investments. By contrast, a fund with strong DPI has demonstrated its ability to convert investment gains into actual distributions for LPs.
This is why benchmarking all three metrics together provides a clearer picture than relying on a single headline return.
Benchmarking With Joe: Powered by Dakota
Joe makes the benchmarking process faster by allowing you to quickly compare private fund performance across relevant peer groups.
Rather than manually pulling together comparable funds, you can use Joe to identify the right peer set and evaluate performance across key metrics like Net IRR, TVPI, DPI, and RVPI.
The process can take less than a minute:
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Find the fund you want to evaluate.
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Define the relevant peer group based on factors like strategy and vintage.
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Compare performance across Net IRR, TVPI, DPI, and RVPI.
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See how the fund stacks up against comparable funds.
Within seconds, you can move beyond looking at a fund's performance in isolation and understand how it compares to the peers that matter.
Why Benchmarking Matters
For LPs, benchmarking provides an objective way to evaluate existing managers, assess new opportunities, and understand whether reported performance is truly differentiated.
For GPs, the same data provides insight into how a fund compares with competitors raising or managing capital in the same strategy.
And for investment professionals more broadly, benchmarking creates a common frame of reference. Instead of evaluating returns as standalone numbers, performance can be viewed within the context of strategy, vintage, and the broader private markets universe.
The goal isn't simply to find the fund with the highest IRR. It's to understand what drove the performance, how much value has been realized, and how the fund compares with the peers that faced similar market conditions.
With the right peer group and the right metrics, that first level of analysis doesn't need to take hours.
It can take less than 60 seconds.
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